What is Acceptance?
According to the Indian Contract Act, 1872, an offer is deemed to be completed only when it is followed by an acceptance from the party/parties to whom the offer has been made. Let’s make it more clear through acceptance meaning, examples, conditions and rules of acceptance.
Acceptance Meaning
As per the Indian Contract Act 1872, Section 2 (b), acceptance is defined as “When the person to whom the proposal has been made signifies his assent thereto, the offer is said to be accepted. Thus the proposal when accepted becomes a promise.”
When an offeree (person to whom the offer is made) gives his unconditional consent to the offer made to him by the offeror, it is considered as an acceptance given by the offeree. Acceptance is important for an offer to be considered complete and to become a promise. Let’s give you an example of the same.
Example
A makes an offer to B for buying his house for 50 lakh. B agrees to this offer. This is called acceptance of the offer.
An offer before acceptance does not create any legal obligations between the parties but once the offer is accepted, it becomes a promise and it is irrevocable. This means that after acceptance is given by the offeree, it creates legal obligations between the concerned parties, with respect to the offer made. Once acceptance is given and communicated, it cannot be withdrawn or revoked. However, the offer can be revoked before acceptance is given.
There are two types of bill acceptances: general acceptance and qualified acceptance. When widespread acceptance is unqualified and unconditional, it is referred to as absolute acceptance.
General acceptance refers to surrender that is granted without qualification. A general acceptance is when someone accepts an order to pay a specific amount in full and without conditions. Unless alternative payment arrangements are made, this is a usual acceptance form.
To be valid as a general rule, an acceptance must be broad. When a person accepts an instrument, they qualify it by putting a condition on it.
Types of Acceptance
Expressed Acceptance
When acceptance is given by the offeree in a written or oral form, it is considered as an expressed acceptance of the offer.
Acceptance by some refers to when some, but not all, of the drawers, agree to the transaction. When the drawee agrees to pay the bill in installments, the bill is accepted for installment payments. This must be stated clearly at the outset of the contract.
The condition of acceptance must be stated very clearly in the agreement and must be understood immediately. Suppose a drawee wants to make a qualification during acceptance. In that case, it must be done such that the instrument holder understands what was accepted and on what qualifications it was accepted.
Example: A makes an offer in person orally to B for buying his house for 50 lakh. B sends an email to A, giving his acceptance to the offer. This is an expressed acceptance.
Implied Acceptance
If the acceptance is conveyed through the conduct/behavior/any other mannerism of the offeree, it is called an implied acceptance.
Example: A buys some products in the supermarket. This is an implied acceptance of A to pay the price that the supermarket is asking for the products.
Conditional Acceptance
Conditional acceptance is also known as qualified acceptance. In this case, the offeree agrees to give his acceptance to the offer only if certain changes are made to the terms and conditions of the offer. This acceptance now becomes a counteroffer which must be then accepted by the offeror for it to become a promise.
Example: A agrees to make the payment to B for the renovation of his house if the work is completed on the due date.
Rules Regarding Valid Acceptance
Acceptance Can Only be Given by the Offeree
Acceptance of an offer can only be given by the person to whom the offer has been made. Self-acceptance meaning states that the acceptance given by the offeree only is considered valid. A third party cannot accept the offer without the knowledge of the offeree. If the offeree has authorized an agent to give the acceptance on his behalf, then the acceptance is considered valid.
Case Law: Powell vs Lee
In this case, the plaintiff had applied for the job as a headmaster and one of the school managers acted without authority, conveying to him that he had been appointed. Later, the managers decided to appoint someone else on the post. The plaintiff sued the school for a breach of contract but the verdict for the case stated that there was no contract as the manager did not have the authority to give acceptance.
Acceptance Must be Communicated
Acceptance must always be communicated to the offeror for the proposal or offer to become a binding contract. Before giving his acceptance, the offeree must be aware of the fact that an offer has been made to him. Acceptance cannot be communicated without the knowledge of the offer. The intent to give acceptance is not considered valid in case it is required for the acceptance to be communicated clearly.
Example: A sends an offer letter to B for buying his house for 50 lakh. B signs the offer but does not send the letter back. In this case, acceptance has not been communicated. Hence, it is not valid.
Acceptance Must be Given in the Prescribed Mode
Acceptance must be given in the prescribed/specified manner that has been stated in the offer. In case a specific mode has not been mentioned, acceptance must be made in a reasonable manner that is used in the normal course of business. In cases where a specified form of giving acceptance is not stated, silence is not considered a form of acceptance.
It must be Unqualified and Absolute
Acceptance must be complete and unconditional. Conditional acceptance is impossible because it would be a counteroffer, nullifying the initial offer. Let's look at an example. B accepts A's offer to buy his cycle for $2,000/-. B says he'll take it if A sells it for 1500/-. This does not imply that the offer has been accepted; instead, it is a counteroffer.
If no such regulated form is specified, it must be expressed ordinarily and reasonably, that is, as it would be in the ordinary course of business. It must also be expressed in a specific way. Implied acceptance can also be demonstrated through behavior, act, or other means.
On the other hand, the law does not recognize silence as a kind of acceptance. As a result, the offeror cannot state that the offer would be considered acceptable if no response is received.
FAQs on Acceptance
1. What is the Postal Exception to the Rules of Communication of Acceptance?
In case of acceptance sent by post, it comes into effect as soon as the letter is posted and not when it is received by the offeror. In this exception, acceptance becomes valid even before it has been communicated to the offeror. Acceptance sent by post will also be considered valid even if the letter does not reach the offeror after it has been posted. The postal rule is applicable only in cases where it has been specified that acceptance must be sent by post.
2. Can Conditional Acceptance be Considered Valid?
Acceptance given by the offeree must be unqualified and unconditional. If the offeree changes the terms of the offer, it becomes a counter-offer rather than an acceptance.
Case Law: Union of India vs Bahulal
In this case, X offered to sell his property to Y for 10 thousand rupees. Y offered to pay eight thousand rupees for the property. Since the acceptance given by Y is not unqualified, it will not be considered a valid acceptance.
3. What is a Reasonable Time to Communicate Acceptance?
Acceptance must be given within the stipulated time stated in the offer. If no such time is mentioned in the offer, acceptance must be given within a reasonable time or before the offer expires. In such cases, a reasonable time will depend on the nature of the offer and similar circumstances. Though silence is not considered an acceptance of the offer, there is an exception to this rule with respect to time. Non-acceptance of the offer must be communicated within 3 weeks of the date from which the offer is made or else silence shall be considered as acceptance.
4. When contact is considered to be accepted?
When a person agrees to the terms and conditions offered by the offeror, it is considered Acceptance of the contract. An offer can be modified or revoked before it is accepted. Once an offer has been accepted, there is a legal obligation on both parties to oblige to the terms and conditions.
5. To whom and how the Acceptance of the offer needs to be communicated?
The Acceptance of the offer needs to be communicated to the offeror or their authorized agents. The communication should also be in such a manner if specifically, the offeror mentions. The Acceptance of the offer needs to be mentioned within a reasonable time, or within the time as mentioned by the offeror. Acceptance of the offer can be either implied or expressed.
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6. Will mere silence to the contract be considered as Acceptance?
If a person fails to respond to an offer made, his silence should not be considered an acceptance. This is a general rule, and the rationale behind this is that the Acceptance must take some form of objective manifestation, which indicates that the offeree has agreed to offer terms and conditions. However, this may depend on a case-to-case basis.
7. What is the difference between Implied Acceptance and Expressed Acceptance?
Implied and expressed, both are considered a valid mode of Acceptance of the offer. In implied Acceptance, Acceptance is not explicitly mentioned orally or in writing; the person's conduct does it. Example- When a customer submits an item to the billing counter for payment of the item. It indicates the customer has agreed to buy the item at the offered price. In expressed Acceptance, the Acceptance is done orally or in writing. Example-A offers B his paintings for sale through the mail and replies positively to the offer by email.
The term "implied contract" refers to a contract that can be inferred from the actions and behavior of the parties involved. Such a contract is formed as a result of the parties' presumed purpose.
8. How can the power of Acceptance of an offer be terminated?
Power of Acceptance of an offer can be terminated on Expiration or lapse of the offer- when the time period within which the decision was communicated wasn't done, Rejection by the offeree- when the offeree rejects the offer, before the offer gets' lapsed, A counteroffer- rejects the power of Acceptance of offer, as a counteroffer itself means not agreeing to the offered terms, A conditional or conditional acceptance by the offeree, automatically abdicates the power to accept the contract. Lastly, a valid revocation of the offer by the offeror terminates the power of Acceptance.
